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60% of companies unprepared for executive pay gap reporting

Three-fifths of UK organisations are still not ready to report their executive pay gap - almost twelve months after the legislation came into force, new research finds.

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A Twitter poll of 1,000 people responsible for reporting the executive pay gap at their respective company, was carried out by HR and payroll software and services provider MHR. It found 60 percent of organisations remain unprepared for the new rules.

 

New legislation introduced in January 2019 means UK listed companies, with more than 250 employees, are obliged to publish the pay ratio between their chief executive and “average” employees in early 2020.

 

Jeanette Wheeler, HR Director at MHR, said: “Although companies affected by the new legislation will already have put robust processes in place to report their gender pay gap, which become mandatory in 2018, calculating the executive pay ratio is more complex and preparing the report can take much longer than expected.

 

“Gathering the data, making accurate calculations and explaining the results is time-consuming and admin heavy. It’s best to start planning as early as possible so that people and resources aren’t overwhelmed at crucial times for your business.”

 

To help organisations meet their obligations to report their executive pay gap, Wheeler explains how to prepare for executive pay ratio reporting:

  • Identify key stakeholders across your business - who will be responsible for providing and processing the data, preparing the report, publishing it and responding to it.
  • Calculate CEO pay – this is their total remuneration package, including salary, taxable benefits, performance-related pay and pension benefits, plus any other assets.
  • Calculate employee pay – identify which workers are “employees” as per the government’s calculation guidelines, then include their full-time equivalent pay and benefits.
  • Choose a methodology to work out the ratio – the government has outlined three methodologies that it will accept for working out executive pay ratio, with option A being their preferred and most accurate. Option B involves using gender pay data to work out the percentiles as “best equivalents”, while option C involves using any pre-existing pay data that your organisation holds.
  • Establish communications plans – be prepared to explain the report’s findings to interested parties.
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